Received a charge off notice from DiTech (after 7 yrs) - what now?

pamzam

LoanSafe Member
Mar 29, 2010
40
2
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I'm glad I found this thread, and was wondering if @OneHugeMess or @eriksandstrom could chime in...?

Brief background.
Current on 1st with Wells Fargo - owe $129,910.
WAY behind on 2nd (DiTech) - owe $61,295. *Haven't paid DiTech since June 2011, following the settling strategy found here.
Current (Zillow) value - $218k (however, homes around here are selling for $180-$200k).

Filed BK (Ch 7) in 2009 - 1st wasn't reaffirmed (if I remember correctly), and 2nd was (or vice versa, I'm sorry, I can't remember. All I remember is the 2nd is still on us).

Over the years, we received things from GreenTree, who later sold to DiTech, saying "this an informational notice and not any attempt to collect debt. If you have a complaint about the way we are communicating, please call..." We get these about every 3 months.

Yesterday, we received a letter of "Suspension of Payments and Notice of Charge Off." It reads: "If the mortgage account has been charged off and no additional fees or interest are being charged on the account, different requirements apply. This notice and the accompanying Mortgage Statement are being provided in accordance with the provisions for charged off accounts.

"The account identified above has been charged off and Ditch will not charge any additional fees or interest on this account. Ditch will not, or will no longer, provide a periodic statement for each billing cycle. Please note that the lien on the property remains in place, subject to applicable BK and non-BK law. Subject to applicable BK law and applicable orders of the BK court, and unless your debt obligation has been discharged:
a - you remain responsible for obligations related to the loan or the property, which may include property taxes;
b - the balance may become due in connection with a sale or other disposition of the property;
c - the balance on the account is not being canceled or forgiven; and
d - the loan may be purchased, assigned or transferred.

Questions, please call..."

Also attached was a 'statement-looking' form with the payment amount ($61, 295) and a thing to 'detach and return this portion with remittance.' It further reads "If you are a debtor in BK or have discharged personal liability for your mortgage account in BK, this is not an attempt to collect a debt against you."

SO - what exactly does all of this mean? What are our next steps?

We were thinking of a short sale; however, we haven't had a loss of jobs or anything like that. We are struggling - we've kept the first current (at $1700/month), and that's been killing us. My husband works full time, and I'm now working 2 jobs. We repeatedly have to take money out of our savings (which isn't much to begin with) to supplement our income and pay bills with. If we are able to short sell (or even sell, and try to pay the difference), I guess we'd have to rent because our credit is probably in the toilet now...it was about 650 and now, with this charge off, I don't even want to know now...

We've also thought of filing (yet again) for BK, and almost started the process last year, and then didn't. Is it still possible to file with this charge off now? And if so, can we knock the 2nd out, or no?

So, please, if anyone can give me some tips and advice, I'd really appreciate it. Thank you so much!!!!!

Pam
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
Hi Pam,
I sincerely apologize I hadn't seen this message until now. Thank you for sharing what they have sent you word for word, this is the first time I'm seeing how they notify you of a charged off account.

Understanding that your goals are to sell the property whether it be short sale or regular sale, the lien will remain on the property and will become due once sold. It sounds like the payoff amount is exactly the $61,295.00.

You roughly owe 191,000.00 on the home that is worth 230K

Here's some math when it comes to the sale:
Realtor commissions (est): 13,800
Closing Costs (est): 3000
10% reserve in case required repairs: 2,300

191,000 + 13,800 + 3000 + 2300 = 210,100 which is still less than what it sounds like you may be able to sell your home for. In this case you would want to proceed with a regular sale.

When it comes to purchasing a new home we do have programs that would allow you to purchase with 15% down immediately. Once the charge off is 4 years old you would be eligible for conventional financing or FHA would be 3 years.

I wouldn't file for bankruptcy again if I were you, that doesn't seem like it would make any sense or help in any way. I believe the next steps you take are going to be based on your ultimate end goal and what is best for you and your family. I'm always up to discuss this anytime as well, never hesitate to give me a call.
 

Jzone

LoanSafe Member
Jun 20, 2017
201
26
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I would start by reviewing your Chapter 7 Bankruptcy paperwork. Or contact your bankruptcy attorney. If you are just guessing at this point as to whether the 1st or 2nd was re-affirmed, dont go any further until you know for sure.

I will be honest with you. Reaffirming either mortgage puts you back on the hook for the debt and basically wipes out the bankruptcy protection you recieve. You should almost NEVER reaffirm a debt that is discharged in bankruptcy. Ive been through Chapter 7 myself.

If your goal is to sell, why are you still paying the first mortgage? The foreclosure process will take at least 6 months and probably closer to a year. Use that time to save the $1700 month for rent.

Find out exactly what was reaffirmed and not. That will tell you if you even have to deal with either mortgage going forward